Finance terms compared side by side
The pairs people mix up, each answered in a sentence and then laid out in a table. The table is the shape an answer engine lifts whole.
Start with these pairs
15-year vs 30-year mortgage payments
A 15-year mortgage is 180 monthly payments and a 30-year is 360. How the payment, the interest total and the rate differ, and why the longer loan can still be prepaid.
APR vs APY: nominal rate against yield
Under US rules an APR skips compounding and an APY includes it. What each rate covers, which one carries fees, why the label means something else abroad.
Gross pay vs net pay
Gross pay is the wage before deductions. Net pay is take-home after FICA and withholding. Same check, two numbers, and why they are not interchangeable.
NPV vs IRR: a value against a rate
NPV and IRR discount the same cash flows, but one answers in money and the other in a rate. Where they agree, where IRR breaks, and which one decides.
ROE vs ROIC
ROE is net income over book equity. ROIC is NOPAT over invested capital. Same firm, two rates, and why a recapitalisation can lift one without moving the other.
Simple interest vs compound interest
Simple interest pays on the original sum only. Compound interest pays on the balance as well. Both formulas, and how far apart they drift over ten, twenty and thirty years.
More comparisons
401(k) vs IRA: workplace against personal
A 401(k) is a workplace plan and an IRA is one you open yourself. How the contribution cap, the employer match, access and investment choice differ under US rules.
Debit vs credit card: whose money moves
A debit card spends money you already hold; a credit card borrows it. What that changes about US fraud rules, credit utilisation, and the cost of carrying a balance.
ETF vs mutual fund: what actually differs
How an ETF and a mutual fund differ: a price all day against one a day, in-kind redemption, the spread you pay to trade, and how narrow the tax gap really is.
Fixed vs variable rate: who carries what
A fixed rate moves the risk of a rise onto the lender and keeps the cost of a fall with you. What caps and floors do, what the premium buys, and when each fits.
Index funds vs active funds: cost and odds
How index funds and active funds differ on fees, turnover and tax, why active investors as a group earn the market return minus their costs, and what persistence shows.
Nominal vs real return: the difference
Nominal return counts currency, real return counts what it buys. The Fisher relation, why subtracting inflation misses in both directions, and when each figure is the one to use.
Roth vs traditional retirement accounts
Roth is taxed now, traditional is taxed later. If your rate is the same at both ends the two are identical, so the choice is a bet on your future rate.
Saving vs investing: horizon and risk
Saving holds the nominal amount steady, investing accepts falls for a higher expected return. How horizon, volatility, access and purpose sort money between them.
Secured vs unsecured loan: the difference
A secured loan is backed by an asset the lender can seize. An unsecured loan is backed only by a promise to repay. Why the rates differ and what default costs.
Stocks vs bonds: ownership against lending
A stock is ownership and a bond is a loan. How that sets who gets paid first when an issuer fails, how each behaves in inflation, and where the two stop differing.